As part of our wider work on policy frameworks to encourage long-term, responsible investment, the UNEP Finance Initiative, the PRI, the UN Global Compact and the UNEP Inquiry into a Sustainable Financial System have established a project to examine how prevailing definitions and interpretations of fiduciary duty affect investors’ approach to the integration of environmental, social and governance (ESG) issues into their investment processes.

This high-level project will lead to a report that both reflects on current practice and offers recommendations on how the obstacles and challenges identified might be addressed.This UK roundtable will look at country-specific legal reviews of fiduciary duty and the barriers to scale up and strengthen the process of integrating ESG.

A provisional agenda for the event can be found below, with speakers including:

Nick Robins, Co-Director, Inquiry into the Design of a Sustainable Financial System at UNEP

Paul Watchman, Special Legal Advisor, UNEP FI

Paul Clements-Hunt, Founder, The Blended Capital Group

This meeting is for PRI signatories only. Contact Anna Bordon if you have any questions.

Agenda

Panel discussion, to include:
• What is Fiduciary Duty and Why it is Important
• The Changing Landscape of Fiduciary Duty
• Complying with Fiduciary Duty in the UK
• A Global Roadmap to ESG Integration

The PRI invites you to join us for this full day conference in Melbourne. The conference will include an update from the PRI’s managing director Fiona Reynolds as well as discussions around topics including ‘Global trends from the PRI’s most recent Report on Progress’ and ‘The academic evidence for ESG engagement’, as well as case studies of innovations in ESG integration. The conference will also include a preview of PRI’s priority investor engagements followed by a hands-on workshop session exploring the implications of megatrends on the energy sector within Australia and an examination of the implications of the Montreal Pledge and Portfolio Decarbonisation.

The conference will be followed by networking drinks. This event is open to all signatories and non-signatories of the PRI.

This session will outline the services provided to signatories by the PRI’s Investor Engagement team. It will give an overview of the Clearinghouse in its current form and a preview of the new Clearinghouse due to be launched this year.The session will cover PRI’s coordinated engagements; the topics, who joins and the reasons why investors collaborate. The upcoming global working group on corporate climate lobbying will also be featured.

In this session, Rob will show delegates the implications of integrating carbon data from different providers into mainstream equity universes based on his software tool. This is expected to stimulate a debate about negative and positive return/risk implications of low carbon strategies.

This panel and subsequent discussion will focus the future of thermal coal; implications for gas as a transition fuel, and the impact that disruptive technologies such as battery storage for solar power might have on investment portfolios.

The PRI invites you to join us for this full day conference in Sydney. The conference will include a presentations on the state of academic quant ESG research in equities and fixed income and the latest in asset owner reporting technologies. There will also be panel discussions on climate change considering the policy and political environment in the lead up to the Paris climate negotiations and the opportunities in ESG investment education as well as workshops on challenges and opportunities for quants using ESG.

Agenda

The state of academic ESG research in equities and fixed income
Andreas Hoepner, Associate Professor of Finance, ICMA Centre, Henley Business School & Senior Academic Fellow, PRI

Andreas will present cutting edge academic research findings on the materiality of ESG within Equities and Fixed Income. This will include: why ESG works, and where ESG can lead to return enhancement and risk reduction results.

11:00

Workshop part 1: challenges and context for analysts and quantitative researchers
Robert Schwob, Chief Executive, Style Research

This session will demonstrate the performance and ESG implications of various ESG strategies implemented in anonymised, real world investment funds. This will be followed by a discussion about ESG integration among the workshop participants.

A brief initial presentation will be given by the speakers, following which delegates will break into groups led by a facilitator to discuss potential ESG investment strategies, both active and passive.

14:45

Climate Change: do we have enough will and attention for a deal in Paris?
Fiona Reynolds, Managing Director, PRI (moderator)
Nathan Fabian, CEO, IGCC
Max Horster, Head of Climate Neutral Investments, South Pole Carbon

While the science of Climate Change is very well known the “Social” Science of Climate Change is much less researched or discussed. This session is expected to look at Data Science evidence of how societal interest in climate change varies over time and how this might affect politicians’ implicit calculations of how many votes can be won or lost by backing the topic. It will also discuss which other social science processes hinder or support the reaching of a global agreement on climate change.

Following the recent controversy about divestment and ESG research in Australia, this session will debate how and if ESG data opposes short term trends in financial markets. It will also pose the question of whether ESG rating agencies are any more independent than established research and monitoring functions in markets such as auditors or sell side brokerage researchers.

Following the success of our Research, Innovation & Stewardship (RIS) events in New York and Paris, we are bringing this thought leading event to the UK. Highlights will include talks on ESG funds that have been showing good performance and live ESG investing simulation workshops.

This free to attend event is aimed at asset owners, asset managers and service providers with an interest in research and innovation. The event is held in parallel with the Critical Themes for 2015 event taking place in London the following day. For information on that event click here.

This will be a crucial year for ESG issues. Climate change and corporate tax reform are undeniably on the agenda, while topics such as fossil fuel divestment and ESG smart beta are being aggressively pushed into focus by grass roots campaigns and structural shifts in the market.

The event will be held at the LSE in London.

The free to attend event is aimed at asset owners, asset managers and service providers with an interest in learning more about the critical themes of 2015. The event is held in parallel with the Research, Innovation & Stewardship (RIS) in Responsible Investment event taking place the day prior at the ICMA Centre at the Henley Business School in Reading. For information on that event click here.

Social responsibility campaigns on social media: how impactful are they really?Damian Borth, Postdoctoral Research Fellow, International Computer Science Institute, University of Berkeley Nina Roehrbein, Assistant – Client Reporting, Hermes EOS Will Oulton, Global Head of Responsible Investment, First State Investments Daniel Beunza, Lecturer in Management, London School of Economics and PRI Academic Network Chair

]]>http://www.unpri.org/events/critical-themes-for-2015/feed/0The growth of ESG in fixed incomehttp://www.unpri.org/whatsnew/the-growth-of-esg-in-fixed-income/
http://www.unpri.org/whatsnew/the-growth-of-esg-in-fixed-income/#commentsFri, 27 Feb 2015 15:18:16 +0000http://www.unpri.org/?post_type=whatsnew&p=11464In a series of roundtables hosted by Lloyds, Sustainalytics and the PRI, fixed income issuers and investors discussed the growth of ESG in the market. The main discussion points were:

On the importance of ESG in fixed income:

Evidence that ESG is here to stay in fixed income:

It has now reached too great a critical mass and gathered too much momentum to be a passing phase.

Equity came to ESG sooner than fixed income and is still seeing growth.

The next generation of asset owners place greater importance on ESG than their predecessors.

ESG considerations are already more prevalent than they might appear, as portfolio managers will often price in ESG risks without explicitly labelling it as an ESG decision.

Within ESG, governance risks have historically been the ones most linked to returns, but environmental risks are seen as the biggest future concern.

What investors want from ESG bonds:

To buy into a philosophy, rather than a one-off project. They are looking for bonds from ESG-aware issuers, rather than isolated ESG bonds from otherwise uninterested companies. There is disagreement on whether this should extend as far as blacklisting certain sectors (e.g. coal, oil, gas), or whether an ESG bond from such a company should be supported.

A clear and detailed explanation of how the use of proceeds relates to ESG:

What type of ESG impact will be delivered?

How important is the bond to this happening? Ideally investors want projects that would not have happened at all without the bond financing.

How big is the ESG impact proportional to the issuer’s respective activities? e.g. How much of a CO2 saving compared to the company’s overall CO2 output?

Does the bond represent a wider transition towards the issuer considering ESG factors?

Benefits for issuers from ESG bonds:

Lower funding costs in the long term. Investors will increasingly consider issuers who have not taken ESG factors into account to be by definition riskier.

A diversified investor base.

An opportunity to engage with investors on ESG factors.

Greater internal discussion of ESG considerations.

Threats to ESG in fixed income:

Price – Some investors worry that lower returns are inherent to ESG bonds due to the additional compliance involved for issuers. Others attribute any price difference to current supply and demand levels. Either way, investors say fiduciary duty means they cannot justify lower returns purely for ESG reasons.

Greenwashing – Investors fear reputational risk from investing in ESG bonds that do not meet specified standards. Standardising documentation, processes, reporting and benchmarks is seen as the key preventative measure, which could be paired with the option to penalise issuers with margin step-ups if they don’t follow through on their commitments.

Reporting Methods – Social and governance factors can be difficult to measure, and for some factors, particularly environmental ones, there can be differences of opinion e.g. is nuclear power green?

Communication – Issuers say they generally don’t know if a bond’s lack of ESG compliance has caused an investor to turn it down. They also suspect that investors often don’t read their reports.

Credit Rating Agencies – The rating agencies do not explicitly report on ESG as a category. Individual risks get considered, but the attention paid varies by sector e.g. for high yield credits, governance factors may be considered more fully, while for utilities, environmental impact may be. The agencies are working on standardising ESG ratings.

Integration – There is a difference of opinion over to what extent ESG bonds should be shaped into a distinct asset class, and to what extent ESG considerations should be integrated into business as usual.

Buildings, through their construction, operation and demolition, are estimated to represent about 30-40% of total energy consumption and associated greenhouse gas emissions. Further, as the world experiences growth in unpredictable weather patterns, the increasing intensity of floods, storms and droughts highlight how vulnerable property assets can be to climate extremes in terms of human, environmental and economic costs.

Responsible Property Investment (RPI) is an approach to property investing that recognises these environmental and social considerations and explores them alongside financial objectives. It goes beyond minimum legal requirements to improve the environmental or social performance of a property. The RPI community will however require support and guidance in order to develop a consistent industry approach to integrating sustainability issues into decision-making processes throughout the investment chain.

Organisations such as the Investor Group on Climate Change (IGCC) and the UNEP Finance Initiative Property Working Group (UNEP FI PWG) have developed such guidance and will be presenting it to investors and property managers during this workshop, accompanied by interactive dialogue on how the guidance can be applied.

Agenda

07:30

Registration and light breakfast

08:00

Introduction from the PRIFiona Reynolds, Managing Director at PRI

08:10

IGCC presentation: Assessing climate change risks and opportunities for investors in the property and construction sector
Rowan Griffin, Head of Sustainability – Investment Management, Property at Lend Lease and IGCC Working Group Chair

08:30

Investor dialogue on how to apply IGCC guidance to investment processes
Moderated by Nathan Fabian, CEO at IGCC
Dominic Ambriano, National Sustainability Manager – Property at AMP Capital
Peter Davidson, Head of Listed Property at BT Investments
Bill Hartnett, Head of Sustainability at Local Government Super

The PRI Initiative would like to thank the AMP Capital for hosting this event.

]]>http://www.unpri.org/events/igcc-pri-unep-fi-breakfast-workshop-on-responsible-property-investment/feed/0LBS Coller Institute releases findings from research on ESG integration and value in private equityhttp://www.unpri.org/whatsnew/lbs-coller-institute-releases-findings-from-research-on-esg-integration-and-value-in-private-equity/
http://www.unpri.org/whatsnew/lbs-coller-institute-releases-findings-from-research-on-esg-integration-and-value-in-private-equity/#commentsThu, 26 Feb 2015 08:51:20 +0000http://www.unpri.org/?post_type=whatsnew&p=11450The London Business School (LBS) Coller Institute of Private Equity has released their findings from the first phase of their research into the link between ESG and value creation in private equity.

The findings are based upon a survey of 42 private equity firms, the primary goal being to gain a deeper understanding of the process of ESG integration and the current state of affairs regarding ESG in the private equity industry. The long term vision of this research project is to gain a deeper understanding of the value creation potential of ESG integration in private equity through the collection of more fine-grained data.

PRI private equity signatories that are interested in exploring academic collaboration through this project are advised to contact natasha.buckley@unpri.org.

The Environmental & Social Risk Analysis (ESRA) course teaches participants how to include environmental and social variables in the traditional analysis made by financial analysts when making lending and/or investment decisions. Participants will:

simulate implementation of environmental and social policies

analyse case studies

carry out exercises based on their own clients’ environmental and social impacts

The course is aimed at risk managers and analysts in commercial, corporate, investment and retail banking dealing with developing countries and emerging markets. A limited number of places are available for representatives from relevant stakeholder audiences including: supervisory/regulatory bodies, banking associations, government agencies, academic institutions, NGOs and civil society organisations involved in finance and sustainability issues.

The Corporate Eco-Efficiency in Financial Institutions course trains representatives of the financial sector on how to efficiently use the resources involved in the daily operations of financial institutions, saving them money and helping the environment.

The course is aimed at middle and higher level financial institution representatives responsible for operational and procurement matters.

The PRI is pleased to invite all signatories with offices in Canada to join us at this meeting to hear about the latest developments at the PRI, both globally and within PRI local networks. The event is an opportunity for all Canadian signatories to discuss how the PRI can help take responsible investment in Canada forward.

The PRI encourages signatories to also attend a lively discussion around new trends and growth areas in responsible investing, hosted by the Rotman Business School MBA Program (see below for further details)

The Rotman School of Management MBA program is hosting a discussion on new trends and growth areas in responsible investing. The event will kick-off with an introduction by Yann Gindre, Director of Networks & Global Outreach at PRI.

Join us for a glass of wine, an appetizer, and an evening of vibrant discussion and network with Canada’s responsible investment professionals and future leaders.